Munger_Disciple

I found the following item on page 91 of the AR to be quite interesting: Lubrizol’s earnings in 2016 included pre-tax losses of $365 million in 2016 related to the disposition in the fourth quarter of an underperforming business. So it looks like Berkshire sold an underperforming division of Lubrizol!

The gap between BV and intrinsic value (IV) will increase over time as Buffett pointed out in the AR. However % change in BV most likely will track % change in IV over the long term while the absolute difference between BV and IV will continue to grow. Thus % change in BV is still a good proxy for % change in IV. Assuming MV tracks IV over long periods of time, you can actually see this phenomenon at work in longinvestor's table.

Buffett mentioned that he would be writing "a lot" about fees charged by active managers in the upcoming annual letter.

I am kind of bummed that Buffett may have loaded up on airlines. God, I wish he bought back $12B of Berkshire instead.... I know it won't happen but I can dream.

+1

I never saw this program before last night. I tuned in to see last night due to the publicity surrounding Buffett. I thought the whole program was very boring and will not watch another episode again.

Fortunately, Buffett has lately been dumping WMT shares. He sold 2/3 of the WMT position during Q3-2016.

I certainly hope Berkshire doesn't buy WMT! If it happens, that would be the signal to sell Berkshire.

So do you think 24.5% CAGR in earnings from 1999-2007 at BHE is not impressive? With or without dividends, 24.5% CAGR is stunning in my mind especially given that return on invested capital is decent.

Additional shares were issued by BHE to Berkshire due to the additional capital invested along the way, so per share comparisons are quite valid.

My guess is yes. There is a line called "Real estate brokerage" under BHE earnings in all the annual reports.

Buffett Most of the earnings growth at BHE/Mid American occurred prior to 2007. Per the 2007 annual report, Mid American earned $15 per share in 2007. So its per share earnings doubled in 9 subsequent years, a pretty decent result (8% CAGR) given what we went thru' during 2008-2009. But it is not amazing. However from 1999-2007, Mid American earnings per share increased at a CAGR of 24.5%, a stunning result.

New CEO named at Fruit of The Loom: http://www.wsj.com/articles/fruit-of-the-loom-inc-names-melissa-burgess-taylor-as-chairman-ceo-1480636167

Complete letter from Howard Marks: https://www.oaktreecapital.com/docs/default-source/memos/2015-09-09-its-not-easy.pdf?sfvrsn=2 Excerpt What Charlie and Professor Galbraith meant is this: Everyone wants to make money, and especially to find the sure thing or “silver bullet” that will allow them to do it without commensurate risk. Thus they work hard (actually, study is intense), searching for bargain securities and approaches that will give them an edge. They buy up the bargains and apply the approaches. The result is that the efforts of these market participants tend to drive out opportunities for easy money. Securities become more fairly priced, and free lunches become harder to find. It makes no sense to think it would be otherwise. And what about the next seven words: “Anyone who finds it easy is stupid”? It follows from the above that given how hard investors work to find special opportunities, and that their buying eliminates such prospects, people who think it can be easy overlook substantial nuance and complexity.

Munger never claimed it was easy. To the contrary, he thought it is exceedingly difficult. Per Howard Marks: In 2011, as I was putting the finishing touches on my book The Most Important Thing, I was fortunate to have one of my occasional lunches with Charlie Munger. As it ended and I got up to go, he said something about investing that I keep going back to: “It’s not supposed to be easy. Anyone who finds it easy is stupid.”

+1 I sure hope he is not levering up his levered small cap stocks with margin debt......

This whole levered strategy does not make sense to me. Does it not violate the first commandment of value investing? i.e., Margin of Safety? Buffett never invested in levered small caps in his partnership days. All his small/micro cap investments had huge margin of safety, starting with a very solid balance sheet.

Thanks VNY!

Any reference on Buffett being a fan of Malone? Thx

It kind of bothers me that Jorge Paulo views Goldman Sachs as a mentor.

VersaillesinNY, Can you please post your notes from the meeting? TIA

In the US, the federal tax rate on long term capital gains is now 23.8% (20%+an additional 3.8% Obamacare "surcharge"). If you live in California, you need to pay an additional state tax rate of up to 13%, which brings the combined tax rate on LT capital gains to nearly 37%! If you have short term gains, the combined tax rate is well over 50% in California. I am not sure if people outside California or New York realize this.

I haven't been following Dhandho closely so this may seem like a silly question. Why is Dhandho/Pabrai selling ETFs? Why do they think they can add value in this field? I thought the original Dhandho plan was to buy an insurer (which they did) and grow by investing float in securities and by expanding insurance biz. I understand they can charge fees to general public that buys ETFs but it seems like a dilution of focus (going from concentrated value investing of float/owner equity to selling ETFs to public).

Thanks!

Poor Charlie, Did you like the book?